“These revisions have created some confusion about the future path of monetary policy,” said Nida Ali from the Ernst and Young Item Club. “MPC members were at pains to highlight the fall in unemployment will not trigger an automatic rate rise, under the pretext that the economy has still not returned to normal. But financial markets are unlikely to be convinced and these forecasts suggest that market interest rates will probably increase.”

Meanwhile the Bank of England said the housing market is supporting the recovery so far, playing down worries the market faces a bubble.

Its Inflation Report notes that increasing market activity boost consumer spending as households buy goods to fill their new homes, while rising prices enable them to borrow more and spend more. And although prices are soaring in London, Carney argued he must look to the rest of the UK where rises are more modest.

“We don’t just make policy for inside the Circle Line, but for the whole country,” he said.

And Carney maintained the Financial Policy Committee will remain “vigilant” in watching for any bubble which could endanger banks.